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Apple’s Revenue sluggish on forcast

After blowout results from Microsoft Corp. and Meta Platforms Inc. spurred huge rallies in their stocks, there are concerns the bar has been set too high for Apple Inc.

Tweet on Apple’s revenue

Bloomberg chart on Apple

Not only does the iPhone maker trade at an elevated valuation to peers after a market-leading 27% rally in the year to date, but it also comes with a weaker growth outlook. Second-quarter results due after Thursday’s close are expected to show a 4.8% drop in revenue and a 5.8% slide in earnings, according to consensus analyst estimates, paving the way for a first year of declining sales since 2019.

“It isn’t as though the business is going downhill, but it is very highly valued, especially since we no longer have the perfect backdrop for tech,” said Daniel O’Keefe, who manages about $36 billion as a portfolio manager at Artisan Partners. “Apple has to grow a lot to generate good returns from here, and there’s no reason to think the growth it has seen over the past several years will continue at that pace.”

  • Shares fell 1.5% on Thursday.

Compared with the stellar results from the likes of Microsoft and Meta, Apple’s report is likely to make for more sobering reading.

UBS Group AG analysts warned on Monday that US iPhone demand had “notably softened” in March, while Bloomberg Intelligence expects the smartphone market to drop 4% this year, with weakness concentrated in the first half of 2023. A disappointing forecast from Qualcomm Inc. on Wednesday underlined concerns about smartphone demand.

Image: AMD